Mar 28, 2016
Avon reaches deal with Barington Capital, avoids proxy fight
Mar 28, 2016
Cosmetics maker Avon Products Inc said it had agreed to give activist investor Barington Capital Group LP the right to approve the appointment of an independent director to the company's board, avoiding a proxy fight.
The nominee would have to be jointly selected by Avon and its top investor, Cerberus Capital Management, to whom Avon sold a majority of its North America business earlier this month.
"We are pleased to have reached this settlement agreement with Barington, which allows us to avoid a potential proxy contest," said Chan Galbato, Avon's non-executive chairman.
Barington has also agreed to withdraw its nominations for election to the Avon board at the annual shareholder meeting scheduled for May 26.
Avon named former FedEx Corp executive Cathy Ross to its board on Monday.
The Barington Capital-led group, which includes NuOrion Partners AG, had proposed a restructuring of Avon in December, asking to add new independent directors and recruit a new senior management team.
The group owns a stake of more than 3 percent in Avon.
Avon has been struggling to reverse a steady decline in sales as the 130-year old pioneer of direct-selling has lost favor to bigger players such as Estee Lauder Cos Inc that offer more exclusive brands.
Avon said earlier this month it would cut 2,500 jobs and shift its headquarters to the UK, responding to which Barington said there was "still much more that needed to be done to improve the business".
Avon replaced half of its board when it agreed to sell a 19 percent stake to Cerberus Capital in December, adding three Cerberus executives to its board, including Galbato as non-executive chairman.
Reuters reported on Sunday that Avon was close to a deal with activist investors under which it would add a new independent director in exchange for the activists backing away from a proxy fight.
Up to their Thursday close of $4.28, shares of the New York-based company had fallen about 46 percent in the last 12 months.
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